By Kate Hill, Adviseable
Whenever significant property price data is released, there is a plethora of news stories about what is happening in markets around the nation.
Often the data will show median price increases at suburb-level, which motivates some buyers into buying in those locations because they believe they are a safe bet and set for even more price growth in the months and years ahead.
Lately, FOMO is unfortunately driving some buyers, who are overpaying for properties because of fear and little else.
However, strategic property investment – whether for a home or a rental property – optimally involves buying before prices start to increase in any meaningful way such as before or at the start of rising market conditions.
With markets firming in many parts of the nation at the same time at present, some buyers may purchase a property in any location expecting superior price growth to automatically occur.
Unfortunately, this won’t necessarily be the case, because area selection is but one part of a strategic property purchase.
Likewise, in times of strong market conditions, the dreaded spruikers return and convince far too many unsuspecting victims to buy inferior properties at inflated prices by using fear of missing out as a sales technique.
Micro considerations
We have always been quite open about the areas where we help our clients buy a home or investment property in.
That’s because there are myriad other fundamentals that must be met before we make recommendations on properties in any location, especially if purchasing interstate.
Most people understand their own suburbs quite well but become less familiar as the distance from their own neighbourhoods increases.
This lack of knowledge often puts them off buying somewhere that might be more appropriate for them which, of course, is where professional buyers’ agents can assist.
In a similar vein, people often only buy in their own neighbourhoods – even for investment purposes – based solely on the fact that they “understand the area” which, again, is not necessarily the best strategy for them.
Within every suburb, there are superior and inferior locations, due to such elements as geographical features, traffic noise, development zones, school catchment areas, and natural risks such as flooding or bushfires.
On top of these, there are further unseen factors such as the location of housing commission properties, local stigma, or plans for significant unit development, which can negatively impact future price growth.
So, within each suburb, we research which are the best pockets for our clients to buy property in.
Then we assess which properties – either on or off the market – are the ideal ones for their needs, including their budgets, as well as their property hopes and dreams.
As you can see, this is far from a scattergun approach or a mindset that any property will do in any location because property “always rises in value”.
While history shows us that Australian property prices have been resilient and have experienced steady capital growth over the decades, there are always periods of flat or even falling market conditions.
This means that some buyers who buy at the peak of a market or purchase a property in an inferior location may have to wait a long time to see any substantial capital growth.
Of course, the ideal scenario is purchasing a property in the best pocket of a location that is also primed for superior capital growth over the medium- to long-term as well as one that meets the needs of your family or your investment strategy.
These are some of the reasons why we don’t keep the locations of where we buy secret… because area selection is always just one part of the overall equation.
